CALGARY, Alberta, Nov 23 (Reuters) - Oil production in
Canada, the largest supplier to the United States, is expected
to increase between 2 percent and 7 percent in 2011 as a
handful of oil sands projects begin operations, analysts and
industry officials said.

Such gains would be similar to the rise estimated for this
year, when new projects such as Nexen Inc's Long Lake
development and Canadian Natural Resources Ltd's Horizon
venture have been slow to hit their design capacity.

Still, the 2010 increase is the first following two years
of declines after companies slammed the brakes on as much as
C$90 billion ($88 billion) of project spending to cope with the
financial crisis.

Now, oil prices around $80 a barrel, tight discounts for
heavy crude and thawing capital markets have prompted a
rekindling of new projects and expansions.

"I think there is more realistic growth now, and growth
expectations," said Purvin & Gertz analyst Steve Fekete, who
expects a gain of 5 percent to 7 percent next year.

"If you were to go back to the '06-'07 period it was
over-exuberance. I think we're seeing steady growth now."

Martin King, analyst with FirstEnergy Capital Corp, said he
is admittedly conservative with an estimated gain of 2 percent
for 2011, a net increase of 60,000 barrels a day.

"I don't see it as being a breakout year in terms of
multiple thousands of barrels a day," he said.

Built into that are expectations for outages at major
projects, which have hampered gains in past years, King said.

The Canadian Association of Petroleum Producers, the
industry's main lobby group, sees an overall gain of 5 percent
in 2011. Spokesman Travis Davies said the estimate does not
reflect a recent jump in activity in Saskatchewan's Bakken and
Alberta's Cardium unconventional oil plays.

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